Feeding Innovation: Distributing Cattle Feed through MFIs
Spandana simultaneously started its operations in both rural and urban areas and has since expanded in both regions. The organisation recognized that there exists a significant variance between these two regions in increases in the credit absorption capacity of its clients and therefore in the improvement of their socio-economic status. The impact of micro-credit is much more evident in urban areas as opposed to rural ones.

Analysis revealed that livelihood options of the urban poor are significantly different from that of the rural poor. While the majority of the urban micro finance clients used their loans for activities related to trading and manufacturing, about 70% of the rural poor invested the loan amount into dairying activities. Clients in urban areas expanded their business in proportion to the availability of capital and some of them took up more than one income generating activity. Over time their businesses stabilized and they chose to acquire assets. In contrast, there was saturation in the credit absorption capacity of rural clients, as they did not find reasons (opportunities) to go for higher loans which would have augmented their income. Further, it became clear that rural clients who are engaged in dairying do not want to expand this activity beyond three buffaloes, despite there being a large market for milk and milk products. When asked why, the rural clients explained that beyond three buffaloes they would need to hire labor, and if they hire labor, dairying becomes unviable. From this discussion, it was evident that most of them, while calculating the profitability of dairying, do not take their own labor into account, leading them to believe that it is profitable. Once they factor in the cost of labor dairying becomes an unviable activity.

Spandana was surprised to find out that the main income-generating activity of 70% of its rural clients is unviable. Efforts were made to further understand this activity by interacting with the women engaged in dairying.
Some of the reasons identified were: increase in the cost of buffalo - the demand for buffalo has gone up since a large number of rural households have taken up dairying as an income generation activity. This has led to an hike in prices; dependence on middlemen/brokers for selection of buffaloes due to poor knowledge on aspects of breed and quality amongst women; dependence on neighboring villages for procuring buffaloes due to absence of linkages with the larger market and also the lack of institutional efforts to increase the quality and quantum of the cattle population; increase in the cost of fodder and nutritional supplements, accompanied by a decrease in the quality of nutritional supplements—including adulteration; and low milk yields.

Spandana realized that since women invest the entire loan amount in buffalo, they do not have enough money to purchase fodder and nutritional supplements, resulting in low productivity. Moreover, dairies pay prices that are far below what the end customer pays. The clients also felt that the demand for milk had increased. It was decided to tackle these issues one at a time, the first being the quality of supplementary nutritional cattle feed.

With the help of ICICI Bank, Spandana negotiated with different cattle feed manufacturing companies. A partnership with Godrej Agrovet, which expressed interest in and shared the mission of improving the yield of buffaloes and therefore the income of poor households, was established. In the initial discussions Spandana had with Godrej, they were assured that the buffalo's milk yield would be increased by at least 1 liter. As this feed replaced the traditional feed/brawn it did not result in additional cost to the client.

Prior to informing clients about this product, Spandana decided to pilot-test the feed to verify the claims. The pilot-test was done with two different breeds of buffaloes and an increase in yield of 1—1.5 liters/day was observed within 10-15 days of using the feed.

Satisfied with the results, Spandana organized awareness campaigns in villages with the help of Godrej Agrovet. Information on the benefits of the feed, with an emphasis on cost, was given. Spandana also offered credit (to be repaid in weekly installments) to its clients for buying the feed and agreed to supply the feed at the client's door-step every month. So far, 625 women have procured the feed and most of them have had excellent results. So far Spandana has supplied 400 quintals of feed to its borrowers. Spandana sees this as a developmental intervention that helps its clients; as such, Spandana has not profited from the cattle feed program and is in fact subsidizing the program's operating costs.

Impact on borrowers
Kalavathi of Sangam Jagarlamudi said "I have been using the Godrej feed since last month. It's great to see that my buffalo started giving 5 liters while it was only 4 liters earlier. My income went up by Rs. 400 per month. Earlier I was giving rice brawn to my buffalo. This feed (Godrej Agrovet feed) is not more expensive. Without any change in the expenditure, net income went up by Rs. 400 per month. I did not see any change in the fat percentage. I am extremely happy that the feed is delivered at my door-step. This should be continued forever. My buffalo looks healthier than before."
Kamakshi of Yadlapalli who has been using Godrej feed since the last five months is extremely happy and shared that the milk production increased by 1.5 liters per day per buffalo. Initially, she used half brawn and half feed, but now has completely replaced brawn with feed. She also said that the fat percentage increased from 7% to 8%. Her income went up by Rs. 1200 per month on two buffaloes.

Rajani of Chebrole said that her buffalo's yield increased by one liter in the morning and 0.5 liter in the evening and fat percentage went up from 9% to 10%. She said that if she stops using this feed, she will immediately observe a decline in the milk yield.

Spandana is an MFI committed to strengthening the socio-economic status of poor women in rural and urban areas by providing technical and financial services.